The phrase, made popular by the Preface to the collection of poems, refers to a new kind of ballad (spelled “ballade”), one that did not consist of “three stanzas with recurrent rhymes” (the traditional form of ballads, meant to be sung by balladeers, street and festival performers since the Middle Ages). Wordsworth and Coleridge proposed a new, freer form, still “musical” in their rhythms but with a distinct content, “the spontaneous overflow of powerful emotion recollected in tranquility.” This intent connected the narrator with Nature, as in “I wandered lonely as a cloud” or “Oft in the stilly night, ‘ere slumber’s chains have bound me,” and introduced a whole new, non-rational approach to poetry, different from the carefully formed poetry of the Age of Reason in form and content. Both “lyrical” and ballad” have since entered the language as metaphorical terms denoting any mild, musical, or reflective mood or action.
A lyrical ballad was a new type of poetry presented to the public in 1798 by William Wordsworth and Samuel Taylor Coleridge. Although their first edition was published anonymously, later editions bore their names and were accompanied by a Preface, written by William Wordsworth, that explained the experiment in poetry that they hoped would become the norm. The Preface is a long document that has become a classic of literary criticism and even represented, according to The Norton Anthology of English Literature, a turning point in modern culture. It's hard to overstate the influence the lyrical ballad, as invented by Wordsworth and Coleridge, had on English literature. In terms we might understand, the lyrical ballad did for its day what the Beatles did for theirs--namely, start a new cultural movement.
To understand what a lyrical ballad is, one needs to understand what poetry was like prior to the introduction of this new poetic form. In the eighteenth century, poetry existed within a hierarchy. Epics and tragedies were at the pinnacle; comedy, satire, and pastoral poetry were in the middle; and short folksy ballads were at the bottom. Think about Paradise Lost at the top and the ballads collected by Robert Burns at the bottom. To be considered a poem of literary merit, a poem had to adhere to certain expectations: It used elevated diction; dealt with characters in the upper classes; and used elaborate figures of speech, such as excessive personification of abstract concepts. And example is Anna Letitia Barbauld's "A Summer Evening's Meditation" from 1772. Wordsworth and Coleridge broke with these conventions by using "incidents and situations from common life" and "language really used by men." In this they incorporated the Romantic tenets of appreciation of the common man and nature into their poetry.
By our standards, lyrical ballads are traditional verse. Wordsworth and Coleridge strongly believed in using "metrical arrangement," that is, consistent rhythm and meter, and most lyrical ballads have strong rhymes. The final requirement they used in their new category of poetry was that the poem must be composed in a "state of vivid sensation" and must seek to recreate that sensation in the reader. This reflects the Romantic tenet of strong emotions.
In summary, then, a lyrical ballad is traditional verse poetry that uses consistent rhythm and meter, rhyme, and the language of common speech to convey and arouse emotions while treating the topics of everyday life. It is poetry for the common person designed to impart pleasure while retaining a standard of literary quality. Examples of lyrical ballads from Wordsworth are "I Wandered Lonely as a Cloud," We Are Seven," and "The Tables Turned."